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TABOR Introduction

TABOR Introduction. TABOR. Tax policy idea that is being proposed in Florida Call it the Taxpayer Bill of Rights In Florida it’s also being called “Smart Caps” It is dangerous to Florida’s economic health Has only been implemented in Colorado

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TABOR Introduction

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  1. TABOR Introduction

  2. TABOR • Tax policy idea that is being proposed in Florida • Call it the Taxpayer Bill of Rights • In Florida it’s also being called “Smart Caps” • It is dangerous to Florida’s economic health • Has only been implemented in Colorado • Colorado was so harmed by TABOR that voters significantly changed it in 2005 • While it is possible to defeat at the polls it can sound good to the average voter

  3. How do they market TABOR? • Promise that TABOR will: • Reduce tax burden • Reign in government • More accountability • Cut wasteful spending and increase government efficiency • Let voters decide on taxes and fees

  4. What is TABOR? • Constitutional Amendment • Limits government revenue = Population growth + Consumer price index • Voter approval needed to go over limits • Some as high as 66.7% • Florida CPI is tied to • Alabama, Arkansas, DC, Delaware, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia

  5. What do the limits apply to? Taxes Fees Fines Payments for services rendered Investment returns Enterprise funds Gifts Federal or State funds

  6. Ratchet Down Effect “As the economy recovered, the law didn’t allow for the budget to return to earlier levels, even though the revenue was available. Any future budget growth had to be calculated by using the lowest point hit during the recession as the base. … Compare the budget to a reservoir. During a drought, the water recedes. Then, when the rain returns, you should be able to refill the lake. But instead … the reservoir had to stay dry.” - Former CO Gov, Bill Owens (R)

  7. Why we’re talking about tabor

  8. Why this matters now

  9. What TABOR really does • TABOR actually: • Reduces investment in needed services • Harms economic growth • Makes cuts permanent • Reduces accountability • Removes Home Rule and local control • Makes it harder to require people pay for services or for violating rules

  10. Shift in financial focus Revenue vs. Cuts

  11. Makes government less accountable and effective TABOR … • removes incentives to find new revenue • replaces local decision making with one-size-fits all formula • shifts responsibility for determining budgets and tax rates away from elected officials • eliminates financial tools against scofflaws

  12. Voter approval of increases unlikely • Since 2000, no Florida statewide ballot to increase taxes or government spending has been approved by 2/3 • 4 of the 6 measures calling for tax cuts have passed with a 2/3 majority

  13. Bonds will be more rare Currently • require 50% +one voter approval Under TABOR • could require 66.7% voter approval • Interest payments count against revenue limit causing cuts elsewhere

  14. What really happened in Colorado

  15. The Economic Reality “Colorado state government is less able to respond to recessions than most other states due to its restrictive revenue and expenditure provisions. While nearly all states are cutting budgets, some are also looking to raise revenues to cushion the blow of budget cuts to key programs. In Colorado, TABOR severely restricts the state’s ability to raise revenues, and to raise them in a timely manner…” • Looking Forward: Colorado’s fiscal prospects amid a financial crisis report, July 2009

  16. Colorado Moratorium In 2005 TABOR was suspended for 5 years by the voters • In addition to suspension – ratchet down component was removed • Businesses endorsed suspension • Denver Chamber of Commerce $708,000 • For suspension campaign spent $8 million total

  17. Colorado economic health • Recovery from last recession in early 2000’s • Lost jobs • Per-capita income fall • Unemployment • Job growth • Credit ratings = negative credit watch • Overall finance management • Impact still felt

  18. Other impacts of TABOR • Reduced money from federal government • No ability to generate new funds • Additional cuts inevitable • Impact on businesses • Fewer contracts • Increased labor costs • Cost-shifting of programs and services to businesses for things once provided by state and local governments

  19. Colorado and Florida

  20. Infrastructure Impact Colorado • D+ • B- • C • C+ Florida • C • B+ • C+ • B- Highways & Roads Bridges Drinking Water Wastewater After 12 years of TABOR budget cuts Colorado ranks only a little worse than Florida

  21. Infrastructure Needs in Florida • 13% of major roads in poor or mediocre condition • 18% structurally deficient or functionally obsolete • $15 Billion investment needed by 2022 • $9.5 Billion investment needed Highways & Roads Bridges Drinking Water Wastewater TABOR will make it harder to fund these needs

  22. “For business to be successful, you need roads and you need higher education, both of which have gotten worse under TABOR and will continue to get worse.” - Tom Clark, Executive Vice President Denver Metro Chamber of Commerce

  23. Education impact After TABOR: • CO K – 12 funding: 35th to 49th • In 2006 CO ranked 48th and Florida ranked 49th • CO per-pupil funding fell by more than $600 • In 2006 CO ranked 37th and Florida ranked 40th Both over $1,000 below the national average. • CO high school graduation rate: 79% to 68% • Florida = 59% in 2001 and 63.6% in 2006 • CO higher education funding fell 31%: 35th to 48th • In 2006, Florida ranked 41st

  24. Florida economic and business environment

  25. Educated Work Force • Since the early 90s the percentage of Florida 9th graders who graduate from high school in 4 years has fallen from 65% to 56% • 17 % of Florida’s 18-24 year olds are not in school, not working, and have no degree beyond high school • 42% of Florida’s 18-24 year olds are in or have completed college

  26. Florida Today • Commercial properties lost 30-40% of value • 5.9% of homes in foreclosure at end of 2009 • State tax collections down 22.8% 07-09 • Property tax collections down $2.28 Billion or 7.5% since 2007 • Tourism dropped 20% in 2009 • Per capita income dropped 3.3% in 2009 • People moving out of state • 2006-2007 +16,195 (10 yrs prior avg. +137,758) • 2007-2008 -24,728 (first year over year loss since 1946)

  27. Government as an economic driver TABOR will • Make Florida’s recovery harder and slower • Make current cuts permanent • Limit growth in government business sector • Kill jobs in government business sector • Create a never ending downward spiral for governments and the businesses that serve them “TABOR does not allow the public sector to be an effective partner with the private sector in creating and maintaining a strong economic climate; instead it becomes an anchor that hinders businesses’ ability to be competitive.” – Letter from five economic development groups in Colorado

  28. TABOR is a bad idea … … especially during a recession • Colorado implemented during flush times • Base line would be at a low point in revenue • TABOR will make it harder to get out of recession and future down turns

  29. TABOR Doesn't Make sense for Florida

  30. Why Florida can’t afford TABOR “The formula…has an insidious effect where it shrinks government every year, year after year after year after year; it’s never small enough…. That is not the best way to form public policy.” - Brad Young (R), former CO Rep & Chair of Joint Budget Committee “[Business leaders] have figured out that no business would survive if it were run like the TABOR faithful say Colorado should be run – with withering tax support for college and universities, underfunded schools and a future of crumbling roads and bridges.” – Neil Westergaard, Editor of Denver Business Journal

  31. TABOR unnecessary • Homestead taxable value growth limited to 3% • 2007-2008 all cities and counties rolled-back to 2006-2007 levels and capped from there • Amendment 1, adopted in January 2008 • Added $25,000 homestead exemption • Capped growth in taxable value for non-homestead property at 10% a year • Save our Homes portability • State already has limit to revenue growth tied to Floridian’s personal income

  32. What you can do now • Sign up for updates • Meet with legislators & candidates now – explain what revenue caps mean to you • Contact legislators during next session • Inform other groups, chambers or businesses • Consider candidates stand on TABOR before you vote or contribute to them

  33. Questions?

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